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STATE OF OHIO
Use Tax Amnesty Program
CONSUMER'S USE TAX AMNESTY PROGRAM
The consumer's use tax amnesty provisions of H.B. 153 (see uncodified section 757.42) provide an excellent opportunity for taxpayers to satisfy their past consumer's use tax liability. The amnesty program begins October 1, 2011 and ends May 1, 2013.
WHAT IS CONSUMER'S USE TAX?
Consumer's use tax must be paid on all taxable purchases of tangible personal property or services used, stored or otherwise consumed in Ohio unless Ohio sales tax has been paid to a vendor or the tax has been properly paid to another state. In general, if you have paid Ohio sales tax on the purchase of tangible personal property or a taxable service, you do not owe consumer's use tax on that transaction. Examples of tangible personal property subject to use tax are computer equipment, printers, fax machines, office supplies (paper, envelopes, folders, pens, paper clips, etc.), furniture and cleaning supplies (mops, brooms, cleaners, paper towels, etc.). Consumer's use tax is also due on the use of taxable services in Ohio. Examples of taxable services include, but are not limited to, installation, repair, employment services (temporary labor), automatic data processing, janitorial and maintenance services, storage services and maintenance contracts.
WHAT ARE THE ADVANTAGES OF AMNESTY?
The Tax Commissioner will waive all unassessed use tax liability due for any periods prior to January 1, 2009. Consumer's use tax paid under amnesty is not subject to interest or civil or criminal penalties. However, if you are registered for Ohio use tax as of June 1, 2011, you will be required to pay interest on any under-reported or unreported consumer's use tax.
WHAT TAXPAYERS QUALIFY FOR AMNESTY?
Taxpayers who have been previously assessed for use tax (at any point in time) are not eligible to participate in the use tax amnesty program. So, if the taxpayer has not been previously assessed for use tax, they are eligible for amnesty.
(Keep in mind that the Budget Bill amended R.C. 5703.58(B) to prohibit a consumer use tax assessment in all circumstances for tax due prior to January 1, 2008, as long as an assessment is not issued before September 29.)
WHAT IF TAXPAYER DOES NOT QUALIFY FOR CONSUMER'S USE TAX AMNESTY?
Taxpayers who do not qualify for consumer's use tax amnesty may still qualify for ODT's Voluntary Disclosure Program which offers penalty but not interest abatement.
WHAT CONSUMER'S USE TAX PERIODS SHOULD
BE INCLUDED IN THE AMNESTY APPLICATION?
Consumer's use tax due on purchases made on or after January 1, 2009 should be included in the amnesty application. However, if you have been issued an assessment for consumer's use tax due for any period, you are not eligible for amnesty. You can apply for consumer's use tax amnesty only once during the program.
WHAT IS THE LOOK BACK PERIOD?
Consumer's use tax is due on purchases made on or after January 1, 2009 through the last day of the month preceding the month in which you request amnesty. You will also be required to register for consumer's use tax and may be required to file returns on an ongoing basis.
IS THE INFORMATION SUBMITED UNDER AMNESTY SUBJECT TO REVIEW?
The Tax Commissioner reserves the right to review the documentation provided under amnesty and any other records that support the amnesty submission in order to confirm that the amount of the amnesty payment accurately reflects your consumer's use tax liability.
WHAT HAPPENS IF I APPLY FOR AMNESTY BUT DON'T QUALIFY?
If a taxpayer applies for amnesty but the ODT determines that they don't qualify because of a prior consumer's use tax assessment or prior consumer's use tax amnesty submission, ODT will issue an assessment for the balance of the consumer's use tax liability, plus interest. Any payment submitted with an application will be applied to the consumer's use tax liability.
IS THERE A PAYMENT PLAN AVAILABLE?
A no-interest payment plan is available to businesses that were not registered for consumer's use tax as of June 1, 2011. In order to qualify for a payment plan, the amount of consumer's use tax due under amnesty must exceed $1,000. The length of the payment plan will be determined by the total consumer's use tax liability and the payment period cannot exceed 7 years (84 months). Further, a minimum payment of $1,000 per month is required. Keep in mind that if you request a payment plan:
- At least one corporate officer, LLC member, general partner or other guarantor (“Guarantor”) must agree to the terms of the payment plan on behalf of the business and agree to accept personal liability for the entire debt; and
- One additional Guarantor must agree to accept personal liability for the entire debt.If the business is a single member LLC, no additional Guarantor is required.
Guarantors signing the payment plan agreement must provide his or her social security number on the payment plan agreement. Further, the business must waive the statute of limitations for assessment of the consumer's use tax due under the payment plan. The first month's payment must be remitted at the time you submit your amnesty application.
HOW CAN MCE SALT SOLUTIONS LLP ASSIST?
MCE SALT Solutions, LLP is a partnership of highly experienced multi-state tax consultants; specifically focused on sales/use and property taxation. All of our partners have developed their experience by working for the Ohio Department of Taxation, and by providing multi-state consulting with Big Four accounting firms for over 50 years. We have extensive experience with various industries including: manufacturing, finance, construction, retail, health care, etc. Let MCE SALT Solutions be the answer to your sales/use tax consulting needs.
For further assistance, please contact:
Dave Muchewicz at 330-723-9973 or e-mail david.muchewicz@mcesalt.com
Randy Cole at 440-585-5600 or e-mail randy.cole@mcesalt.com
STATE OF CALIFORNIA
ADVANCED MANUFACTURING SALES AND USE TAX EXCLUSION
Recently adopted California legislation grants a sales and use tax exclusion on machinery and equipment used in “advanced manufacturing” projects.
- The exclusion:
- Applies to tangible personal property used in certain advanced manufacturing processes or systems;
- Is prospective and discretionary; and
- Is limited to $100 million annually for all applicants in aggregate.
- Although not currently being accepted, applications will be submitted to the California Alternative Energy and Advanced Transportation Financing Authority (“CAEATFA”), whose authority has been statutorily expanded and allows it to determine applicants' qualifications and grant the exclusions.
Advanced manufacturing is defined as:
Manufacturing processes that improve existing, or create entirely new, materials, products, and processes through the use of science, engineering, or information technologies, high-precision tools and methods, a high-performance work force, and innovative business or organizational models utilizing any of the following technology areas:
- Micro-and nanoelectronics, including semiconductors,
- Advanced materials,
- Integrated computational materials engineering,
- Nanotechnology,
- Additive manufacturing, or
- Industrial biotechnology.
Advanced manufacturing also includes:
- Systems that result from substantive advancement, whether incremental or breakthrough, beyond the current industry standard, in the production of materials and products…[,] often referred to as ‘smart' or ‘intelligent' manufacturing systems ….
- Sustainable manufacturing systems and manufacturing technologies that minimize the use of resources while maintaining or improving cost and performance.
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